Credit cards--i.e. devices, most commonly represented by a plastic card-like member through the use of which an authorized cardholder pays for, by way of example, purchases of services and/or merchandise and the like--have become so universally well known and ubiquitous as to have fundamentally changed the very manner in which financial transactions and dealings are viewed and conducted in society today. Such credit cards are generally issued by a bank and provide a mechanism by which a cardholder purchases goods without an immediate, direct exchange of cash and thereby incurs debt which the cardholder may thereafter (i.e. upon receipt of a monthly or otherwise periodic statement) either fully pay the outstanding balance or, as a matter of necessity or choice, defer at least a portion of the balance for later payment with accompanying interest or finance charges for the period during which payment of the outstanding debt is deferred.
The spending power (i.e. the total amount of funds available to the cardholder at any particular time for making purchases and the like) of a credit card is typically limited to a particular amount (the "credit limit") predetermined by the issuer of the card. The size of the issuer-imposed credit limit is generally based on a number of nonexclusive factors, the most important of which are often the cardholder's earning capacity and the cardholder's credit history. When purchases are made or debts incurred with the credit card, the available portion of the credit limit is reduced by the purchase or debt amounts. In addition, interest and/or finance charges are also subtracted from the available portion of the credit limit on a periodic basis. The total debits on a credit card are referred to as the "outstanding balance", while the remaining or available balance of the credit limit is typically called the "available balance" and reflects the dynamically adjusted current spending power of the credit card. The cardholder may increase the available balance, up to the credit limit, by paying to the issuer (or its representative) the entire outstanding balance or a fractional portion thereof.
The cardholder may also optimally obtain from the issuer one or more secondary credit cards, as for example for family members, that are linked to the main credit card. The secondary credit cards are functionally identical to the main credit card in all respects and, indeed, typically bear the same account number and differ from the primary card only in the name of the person who is authorized to use the secondary card. Any purchases made using the secondary credit cards are debited against the credit limit of the main credit card or, put another way, against the single account in which the primary and secondary cards are issued. Thus, the main or primary cardholder has no control over the spending power or abilities of the secondary credit cards linked to his card, beyond the fact that the total of all debts incurred by all cards on the account cannot exceed the issuer-imposed credit limit. This arrangement is problematic because the secondary cardholders can quickly and undetectedly accumulate a significant outstanding balance on the main credit card account, thus reducing the main cardholder's spending power. Most importantly, the main cardholder does not know and is not automatically made aware of the purchases made by the secondary cardholder(s), and thus may be inconvenienced or embarrassed when seeking to use the main credit card to make a purchase. The main cardholder is notified of the purchases made by the secondary cardholders only when the periodic statement is received from the issuer. For example, if the main credit card's credit limit is $2,000 and the outstanding balance is $1,200, the main cardholder's remaining or current spending capacity is $800. If a secondary cardholder makes a $700 purchase, then the main credit card's spending capacity is suddenly reduced to $100 without the main cardholder's knowledge. This could present a particular problem where the main cardholder is intending to make a large or important purchase with the main credit card.
In recent years, several alternatives to credit cards have appeared--debit cards and stored value cards. A debit card is linked to the checking account of a cardholder; when the cardholder makes a purchase, the amount of that purchase is automatically deducted from the cardholder's checking account. This approach is problematic for several reasons. First, while credit card terminals are prevalent in most establishments, many debit cards require an additional, specially-configured terminal or a modification to an existing terminal, often at considerable expense to the merchant. Second, unlike a conventional credit card with which the cardholder has an option of paying for purchases over an extended period of time, debit card purchases are immediately deducted in full from the checking account and the cardholder's spending ability is limited to his currently available checking balance. This restricts the cardholder's ability to make large purchases. Third, debit cards are not profitable for issuers because there are no interest or finance charges, which serve as a primary source of an issuer's profit from credit cards. Most importantly, debit cards do not enjoy the functionality of credit cards in many business transactions. For example, renting a hotel room or a car typically requires a conventional credit card for security deposit purposes even if the ultimate balance is settled in cash. And unlike debit cards, credit cards may be used to make purchases by telephone, through the mail, or over the Internet.
A stored value card, on the other hand, is purchased from an issuer in a fixed amount. That amount is "stored" in a chip or magnetic stripe on the plastic card or substrate. When a cardholder makes a purchase, a card reader subtracts the amount of that purchase from the fixed amount currently on the card and writes the new balance to the card. This approach has a number of disadvantages. First, stored value cards require special readers that will not work with debit or credit cards. Because there is no common industry standard for stored value cards, a merchant might be required to acquire several terminals to process the stored value cards from different issuers. Second, stored value cards lack conventional credit cards' protection against theft or loss; losing a stored value card is the same as losing cash. Finally, as is the case with debit cards, stored value cards do not enjoy other advantages of credit cards, and thus cannot be used for security deposit purposes, or for ordering merchandise or services by telephone, mail, or over Internet.
It would thus be desirable to provide one or more prepaid satellite cards that are linked to a cardholder's host credit card such that a predetermined available spending capacity of each satellite card can be selectively determined by the cardholder of the host credit card and deducted from the available balance of the host card. It would further be desirable to provide a method for enabling the cardholder of the host credit card to remotely increase the available spending capacity of the one or more associated satellite cards by deducting the desired spending capacity of each satellite card from the available balance of the host credit card as a purchase.
Other objects and features of the present invention will become apparent from the following detailed description considered in conjunction with the accompanying drawing. It is to be understood, however, that the drawing is designed solely for purposes of illustration and not as a definition of the limits of the invention, for which reference should be made to the appended claims.